The Cost of Public Debt: Expectations for Joe McCarthy and the Pain It Takes to Put a President on a Wall Street Effort
If Speaker Kevin McCarthy can’t escape the debt trap he has set for President Joe Biden, millions of Americans could face massive consequences.
The California Republican traveled to Wall Street on Monday to deliver a fresh warning that the House GOP majority will refuse to lift a cap on government borrowing unless Biden agrees to spending cuts that would effectively neutralize his domestic agenda and neuter his White House legacy.
If the debt ceiling is not raised, McCarthy told traders that he would not allow the US government to default on its obligations, a disaster that would cause a recession, lead to job cuts and halt Social Security payments.
This is the location of the risk to Americans. It’s hard to see how a rookie speaker, with a tiny majority and a conference containing plenty of extremists, can engineer either of these outcomes.
Most countries don’t require the legislature to raise the government’s borrowing threshold. But the quirky situation in the US has made a once routine duty an opportunity for political mischief in a polarized age. Since the government spends more than it makes in revenue, it must borrow money to service its debt and pay for spending that Congress has already authorized. The US gets more credit because it pays its bills, and has a stellar credit rating even though it was threatened of default in the past.
Another complication is that some members of the Republican conference have said they will never vote to raise the debt ceiling on principle – no matter what. The Republican majority could ignore such holdouts. In McCarthy’s narrow majority – secured after a 2022 midterm election that fell short of GOP expectations – they have real leverage. The Democrats have little incentive to help McCarthy since they would have to vote for huge cuts that Biden has opposed if Republicans broke ranks and changed their minds. And the speaker probably couldn’t risk using Democratic votes anyway after agreeing to a rule, as he battled to win his job, that lets any single member call a vote on his ouster.
His assurances may not be very reassuring, because his predictions that he would win the speakership in January turned into a farcical process that saw him make huge concessions to his party’s most radical members.
The Problem of Debt and Spending: Dem Dems, Republicans, and the Biden-McClark Biden Era
But with the debt ceiling, it will be Americans’ livelihoods and the global economy, rather than McCarthy’s immediate political ambitions, that are on the line.
So far, Republicans seem to be in trouble with each other, and Biden in particular. The GOP hopes to pass the initial bill next week but is facing challenges, according to Republican Rep.Dusty Johnson of South Dakota.
The hardest part is that there are so many conservative policy victories and we want to see them worked in. There is only so much you can get in a negotiation. I think the biggest issue at the moment is how we can squeeze these many desires down to a manageable number of questions.
There is nothing wrong with the Republicans using their victory in the election to further their agenda of cutting spending. There are some GOP lawmakers who sincerely worry about debt and deficits – even when their party runs government. Plenty of economists worry about the always ballooning national debt, which has crashed through $31 trillion. And Biden’s big spending on Covid relief packages, infrastructure, climate mitigation measures and health care programs triggered a debate on whether he worsened the inflation crisis.
Is Republicans choosing the right hill when millions of jobs and market-linked pension plans are at risk? The absolutist nature of McCarthy’s position pays little heed to a delicate balance of power. Democrats control the White House and the Senate, so in handing Republicans the House, albeit barely, voters might have been seeking compromise rather than confrontation.
“Without exaggeration American debt is a ticking time bomb that will detonate unless we take serious responsible action. How has President Biden dealt with this issue? He has not done anything. So in my view, and I think the rest of America, it’s irresponsible,” he said.
Republicans have a poor record in fiscal showdowns between Congresses and Democratic presidents. Clinton and Obama gained political traction by branding their rivals in the House as economic arsonists.
“There is one responsible solution to the debt limit: addressing it promptly, without brinksmanship or hostage taking – as Republicans did three times in the last administration and as Presidents Trump and Reagan argued for in office,” spokesman Andrew Bates said.
Source: https://www.cnn.com/2023/04/18/politics/mccarthy-biden-debt-ceiling/index.html
The GOP Budget, Spend, and Grow Act: Replacing the Inflation Reduction Act of 2024 and Improving the Internal Revenue Service
The Republicans of the Senate have been trying to keep their head above water. McConnell gave his congressman some moral support on Monday when he came back to the Capitol after taking a fall.
“President Biden has a choice: Come to the table and stop playing partisan political games, or cover his ears, refuse to negotiate and risk bumbling his way into the first default in our nation’s history,” McCarthy said.
McCarthy’s speech on Monday made it feel like the political crisis over the debt ceiling has moved towards a boil after months of simmering.
Senate Democratic Leader Chuck Schumer of New York said on Monday that if Speaker McCarthy keeps on this path we are going to default.
The limit, save, grow act of 2024 would raise the debt limit by approximately 1.5 trillion or until March 31 of 2024, whichever occurs first, return discretionary spending to 2002 levels, and limit the growth of spending to 1% annually.
McCarthy claimed on the House floor that limited government spending will restore fiscal discipline in Washington. It will have to come together in order to find savings just as every single household in America does.
McCarthy, whose remarks echoed a speech he gave at the New York Stock Exchange on Monday, said the plan would also repeal key parts of Democrats’ signature legislative package — the Inflation Reduction Act — as well as President Biden’s program to cancel college student debt, which is currently tied up in courts.
The GOP bill would target the $80 billion aimed at improving the Internal Revenue Service — which Democrats approved last year as part of the IRA aimed at easing up on the agency’s backlog. Even though the Senate wouldn’t pass the legislation, House Republicans voted to reverse it. The nonpartisan Congressional Budget Office has estimated the allocated $80 billion over 10 years for the IRS would increase revenues, and that repealing the measure would actually contribute to the deficit.
He noted Medicare and Social Security — two programs that have broad public support but are also major drivers of spending — would not be impacted by the cuts.
“Our plan ensures adults without dependents earn a paycheck and learn new skills,” he said. “Restoring these commonsense measures can help more Americans earn a paycheck, learn new skills, reduce childhood poverty and rebuild the workforce.”
Speaker McCarthy and his extreme Republican colleagues are ensuring their failure to negotiate debt ceiling talks with the House Appropriations Committee on Agriculture and Food Security
Democrats are against any effort to link debt ceiling talks to bills that would require work for those on assistance programs.
David Scott said that raising the debt limit isn’t a good idea, since it would allow food assistance to be held hostage for those who depend on it.
“By including these radical proposals as a lever in debt limit negotiations, Speaker McCarthy and his extreme Republican colleagues are ensuring their failure,” he said.
McCarthy was angry that the president didn’t meet with him to negotiate. The pair last met in February, and are still at odds about how to address debt limit.